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Why Tax Cuts Aren’t Good News If You Plan to Get a Mortgage

Apr 16, 2018, 13:34 PM
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Tax cuts are great, right? Not necessarily, if you’re planning to get a mortgage in the next few years.

Mortgage rates have increased dramatically in 2018, and tax cuts get at least some of the blame for that. Expanding federal budget deficits brought about by the tax cuts could shove mortgage rates even higher, perhaps past 6% in the next couple of years.

How to deal

You can’t fight higher interest rates and inflation, but you can learn to live with them:

Learn about ARMs. As fixed mortgage rates rise, more borrowers will get adjustable-rate mortgages, says Mat Ishbia, president and CEO of United Wholesale Mortgage. The introductory rates on ARMs tend to be lower than fixed-rate mortgages. ARM rates can rise later, though. Ishbia says educating consumers about ARMs will become an important part of his company’s business in the next few years.